The Indian government has barred all foreign telecom equipment vendors from the INR 210 billion (US$3.9 billion) national optical fiber network (NOFN) project that is meant to bring high-speed Internet connectivity to far-flung rural areas in the country.

India's Department of Telecommunications (DoT) has said that 100 percent domestic sourcing is mandatory for the NOFN project, the Economic Times reported on Saturday. Its list of certified vendors include Himachal Futuristic Communications (HFCL), ITI, Tejas Networks, Center for Development of Telematics (C-DoT), VMC Systems, Prithvi Infosystems, Sai Systems, United Telecoms, and SM Creative.

(Credit: ZDNet

"We will comply with DoT's network security guidelines and norms to promote domestic manufacturing of network gear, and will invite bids by mid-February," an unnamed executive from Bharat Broadband Network (BBNL) said in the report. BBNL is the entity overseeing the NOFN project, which is to be jointly implemented by state-owned telcos Bharat Sanchar Nigam Limited (BSNL) and Mahanagar Telephone Nigam Limited (MTNL).

Last November, in an internal note to Telecom Secretary R Chandrasekhar, C-DoT said that India should keep Huawei and ZTE out of "sensitive government projects" in light of the US congressional report, which stated that both vendors posed a security threat to telecom networks worldwide due to alleged links with the Chinese military.

The Economic Times' report noted that the Indian government went a step further and excluded all foreign vendors from the NOFN project.

The Indian offices of Huawei and ZTE, as well as Ericsson, Nokia Siemens Networks, and Alcatel Lucent declined to respond to queries on their exclusion from the list of eligible GPON (Gigabit Passive Optical Network) suppliers, according to the report.

However, the report cited an unidentified top executive with an international telecom equipment company as saying: "It is difficult to understand how the suggested levels of domestic sourcing for GPON equipment have been defined when they are yet to be launched or reach a certain level in terms of economies of scale in India."

The source added that the deliverables are improbable to comply in the absence of a ready ecosystem.

Another unnamed executive said that the Indian government "may end up paying a higher amount for GPON gear, as there was a 22 percent cost disadvantage for electronics manufactured in India compared to imports", the report noted.